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Motor insurance premiums fall to two-year low

UK motorists are paying less for their car insurance, according to the latest industry figures.

The Association of British Insurers (ABI) found that in the first quarter of 2019, the average cost of motor insurance fell to the lowest level for two years.

Separate figures show a rise in van insurance premiums, however.

The ABI's Motor Insurance Premium Tracker reveals that the average price paid for motor insurance in the first quarter of the year was £466, the lowest quarterly figure since the first quarter of 2017.

The average premium fell by £15 on the previous quarter -- the largest quarter-on-quarter fall since 2013. It was also the fourth consecutive quarter of premiums going down year-on-year.

What's behind the decrease?

Some insurers are passing on expected cost savings in anticipation of the reforms under the Civil Liability Act, which will deliver a fairer compensation system for claimants and continued competitive premiums for motorists, the industry body said. Additionally, there was an increase in new car registrations in March -- with new vehicles typically purchased by more mature, lower risk drivers.

Mark Shepherd, assistant director and head of General Insurance Policy at the ABI, said: "The falling cost of motor insurance is great news for motorists after several years of rising premiums, which largely reflected the UK's costly personal injury compensation system. As the industry promised, motorists are now beginning to see the benefits of the personal injury reforms recently enacted."

Shepherd went on to note, however, that there are still some cost pressures, such as repair costs rising, and he urged the Government to resist any temptation to further increase Insurance Premium Tax.

Increasing repair costs were a major factor behind van insurance premiums going up by 1% in the first quarter, although prices were still down by 0.2% year-on-year.

The latest Van Insurance Index from industry data specialist Consumer Intelligence shows that average premiums were £1,109 in the three months to March.